Product Disclosure Statement (PDS) ISSUER: DEVON FUNDS MANAGEMENT LIMITED

Transcription

1 Product Disclosure Statement (PDS) ISSUER: DEVON ALPHA FUND DEVON AUSTRALIAN FUND DEVON DIVERSIFIED INCOME FUND DEVON DIVIDEND YIELD FUND DEVON TRANS-TASMAN FUND GLOBAL THEMES FUND This document replaces the Product Disclosure Statement dated This document gives you important information about this investment to help you decide whether you want to invest. There is other useful information about this offer on Devon Funds Management Limited has prepared this document in accordance with the Financial Markets Conduct Act 2013 (FMC Act). You can also seek advice from a financial adviser to help you to make an investment decision.

2 Key information summary. What is this? This is a managed investment scheme. Your money will be pooled with other investors' money and invested in various investments. Devon Funds Management Limited (Devon, we, us, our) will invest your money and charge you a fee for our services. The returns you receive are dependent on the investment decisions of Devon and the performance of the investments. The value of those investments may go up or down. The types of investments and the fees you will be charged are described in this Product Disclosure Statement (PDS). What will your money be invested in? There are 6 separate funds (Funds) offered under this PDS. These investment options are summarised on the following page. More information about the investment target and strategy for each investment option is provided in the Description of your investment option(s) on page 7. Who manages the Devon Investment Funds? The manager of the Funds is Devon Funds Management Limited. See Who is involved? on page 14 for more information about us. What are the returns? The return on your investment comes from: any increase or decrease in the Fund s unit price; and any distributions made to you from the Fund. How can you get your money out? You may at any time request the redemption of some or all of your investment. Minimum redemption amounts may apply and you will need to complete a redemption request in the prescribed format which is available from Devon on request. Subject to relevant law, we may defer or suspend redemptions in some circumstances. See How does this investment work? on page 5 for more information on how to get your money out. Your investment in the Funds can be sold in accordance with relevant law but there is no established market for trading these financial products. This means that you may not be able to find a buyer for your investment. How will your investment be taxed? Each Fund is a Portfolio Investment Entity (PIE). The amount of tax you pay in respect of a PIE is based on your Prescribed Investor Rate (PIR). To determine your PIR, go to the IRD website For further information, see What taxes will you pay? in section 6 on page 13. Where can you find more key information? Devon is required to publish quarterly Fund Updates for each Fund. The Fund Updates show the returns, and the total fees actually charged to investors, during the previous year. The latest Fund Updates are available at We will also provide you with copies of those documents on request. The Devon Alpha Fund, Devon Australian Fund and Devon Trans-Tasman Fund intend to pay distributions semi-annually. The Devon Diversified Income Fund and the Devon Dividend Yield Fund intend to pay distributions quarterly. The Global Themes Fund does not currently pay distributions. All distributions are at our discretion. See How does this investment work? on page 5 for more information. 1

3 Devon investment options. See What are the risks of investing? on page 10 for an explanation of the risk indicator and for information about the risks that are not included in the risk indicator. To help you clarify your own attitude to risk, you can seek independent financial advice or work out your own risk profile at Fund Name Description Risk Indicator* Annual Fund Charges Based on Net Asset Value (NAV) DEVON ALPHA FUND A concentrated portfolio of approximately select companies listed on the New Zealand and Australian share markets. The Alpha Fund does not follow an equity index and is actively managed. When appropriate investment opportunities cannot be identified, the Alpha Fund may hold cash or cash equivalent securities. The Alpha Fund aims to generate capital growth over the long term. LOWER RISK HIGHER RISK potenially lower returns potenially higher returns 1.76%** DEVON AUSTRALIAN FUND A select portfolio of approximately companies which are primarily Australian listed companies. The Australian market offers exposure to a number of sectors that are not available in New Zealand. The Australian Fund is actively managed, which means the holdings and investment returns may differ considerably from its benchmark. The Fund tends to be fully invested in shares but can hold cash. LOWER RISK HIGHER RISK potenially lower returns potenially higher returns 1.67%** DEVON DIVERSIFIED INCOME FUND* A carefully selected portfolio of government and corporate bonds, cash, listed property, infrastructure and utility companies, high yielding equities, credit securities and other yielding financial assets. Devon utilises its expertise in Australasian equities and employs the specialist services of the JBWere Fixed Interest team to advise on fixed interest security selection. LOWER RISK potenially lower returns 4 HIGHER RISK potenially higher returns 0.90% DEVON DIVIDEND YIELD FUND A select portfolio of approximately New Zealand and Australian listed equity securities chosen for their attractive dividend yields, with some growth prospects to maintain the dividend yield and capital value in real terms. LOWER RISK potenially lower returns 4 HIGHER RISK potenially higher returns 1.12%** 2

4 Devon investment options. Continued... Fund Name Description Risk Indicator* Annual Fund Charges Based on Net Asset Value (NAV) DEVON TRANS- TASMAN FUND A select portfolio of approximately well researched companies which are primarily New Zealand and Australian listed companies. The Trans-Tasman Fund is actively managed, which means the holdings and returns may differ considerably from its benchmark. The Fund tends to be fully invested in shares but can hold cash. LOWER RISK HIGHER RISK potenially lower returns potenially higher returns 1.74%** GLOBAL THEMES FUND* An portfolio of global financial assets and cash. These assets may include Exchange Traded Funds, listed equity securities, index funds, futures contracts, currency positions and derivative securities. The Fund is actively managed which means holdings and investment returns may differ considerably from its benchmark. LOWER RISK HIGHER RISK potenially lower returns potenially higher returns 1.20% * NOTE: A combination of actual Fund and market index returns has been used to determine the risk indicator for the Diversified Income Fund and the Global Themes Fund as these Funds have not been operational for the required 5 years. The risk indicator may therefore provide a less reliable indicator of potential future volatility of these Funds. Market index returns have been used for the period to 1 January 2016 for the Diversified Income Fund and 17 October 2014 for the Global Themes Fund, being the inception date for each Fund. ** The Alpha, Australian, Dividend Yield and Trans-Tasman Funds fees include estimated performancebased fees. See page 11 for more information. 3

5 Contents 1. Key information summary 1 2. How does this investment work? 5 3. Description of your investment option(s) 7 4. What are the risks of investing? What are the fees? What taxes will you pay? Who is involved? How to complain Where you can find more information How to apply 15 Glossary 16 4

6 How does this investment work? Devon is an investment management business specialising in building investment solutions for our clients. Our highly qualified and experienced team is committed to helping you achieve your investment objectives. We believe our advantage lies in our people a dedicated team of investment professionals with many years experience in managing portfolios, both within Australasia and further afield. We ve worked hard to assemble the right talent with the necessary skills and experience to manage your Funds. We take pride in the fact that we are 100% New Zealand owned. It is the policy of Devon that all staff can only invest in Australasian equities via the Devon Funds, ensuring alignment with clients interests. We manage money on behalf of a diverse range of leading New Zealand clients, including large superannuation schemes, Community Trusts, charities, KiwiSaver schemes, Iwi, corporate pension schemes and individual investors. Investing in managed funds can help you achieve your savings goals and create greater wealth for your future. We believe some of the potential benefits of investing in our Funds are: Professional Management: Employing the expertise and resources of a professional manager may be beneficial if you do not have the time or skill to manage your own investments. Diversification: By pooling together large amounts of money, we are able to invest in a portfolio of securities which allows for diversification with the aim of reducing the risk of your investment. It also provides access to markets and securities that might otherwise be out of reach. Administrative Simplicity: Our Funds are Portfolio Investment Entities (PIEs). PIEs offer significant advantages from an administrative perspective. We take care of the paperwork involved in buying and selling securities, managing your dividends, interest, corporate actions, reporting and record keeping. Tax Advantages: Our Funds are all PIEs for tax purposes, meaning that if you are a New Zealand resident unit holder and have supplied us with the correct PIR, tax is usually paid on your behalf at a rate approximating your marginal tax rate and there is no further tax to pay. PIE tax is capped at 28% which can be a benefit for 33% tax rate investors. 5

7 This PDS is an offer of units in the Devon Investment Funds. Each Fund is constituted within a Managed Investment Scheme that is governed by the Devon Trust Deed (dated 30 September 2016). The money you invest buys units in the Fund(s) you ve chosen. The price of each unit you receive depends on the value of the Fund at the time you invest. We calculate the unit price by dividing the Net Asset Value of the Fund by the number of units the Fund has on issue. The unit price is calculated daily and published on our website. Daily unit prices for each Fund will change as the market value of those Funds assets change. The return on your investment is reflected in any increase or decrease in the unit price and any distributions from the Fund(s). The number of units you have (your unitholding), when multiplied by the unit price, gives you the total value of your investment in the Fund (although the impact of tax can result in a change in the number of units you hold, up or down, as the unit price is calculated before tax). No assets of a Fund will be available to be applied to meet the liabilities of any other Fund managed by us. Distributions The Devon Alpha Fund, Devon Australian Fund and Devon Trans Tasman Fund intend to pay distributions semi-annually. The Devon Diversified Income Fund and the Devon Dividend Yield Fund intend to pay distributions quarterly. The Global Themes Fund does not currently pay distributions. All distributions are at our discretion. You can elect to have distributions re-invested in the Fund or direct credited to your bank account. Please note, we do not pay to third party bank accounts. Withdrawing your investments If you wish to make a redemption you must complete a redemption request in the prescribed format which is available from Devon on request. Once submitted, your redemption request is not able to be withdrawn. We have the ability, in certain circumstances to suspend or defer redemptions. In the event that this should ever occur, you can still submit a redemption request and these will be processed, in the order in which they are received, once the suspension or deferral has been lifted. You may withdraw amounts of $2,000 or more. If your withdrawal would result in your investment falling below $2,000, we may request the Supervisor to withdraw the balance of your holding and repay the proceeds back to you. Withdrawal requests will be processed each business day in Auckland. The withdrawal value of the units will be paid to you, after adjustment for any tax payable (if applicable), within 30 business days from the date your withdrawal request is received. No person guarantees or promises the repayment of, or returns on, your investment in the Funds. How to switch between Funds You can also switch between Funds as often as you like at no charge. Completed switch requests will be made on the next available unit price. A switch will be treated as a redemption from one Fund and an application into another Fund. Devon does not charge an entry/exit fee or a buy/sell spread. A switching form is available from Devon on request. Making investments You can make lump sum or regular investments into the Funds. Investments can be made by completing the application form for the relevant Fund(s) at the back of this PDS. A NZ$10,000 minimum applies for the initial contribution and NZ$100 minimum per quarter for subsequent regular payments. For information on how to invest in the Fund(s), see How to apply on page 15. 6

8 Description of your investment option(s). The table below summarises the strategy, objectives and characteristics of each Fund. More information is contained within the Statement of Investment Policies and Objective (SIPO) of the Funds. Summary of investment strategy and objectives DEVON ALPHA FUND Strategy: The Fund invests in a concentrated portfolio of approximately select companies listed on the New Zealand and Australian share markets. The Alpha Fund does not follow an equity index and is actively managed, which means that we make our own investment decisions rather than have the Alpha Fund passively follow an index. When appropriate investment opportunities cannot be identified, the Alpha Fund may hold cash or cash equivalent securities. The Alpha Fund aims to generate capital growth over the long term. The Fund is able to hold equities listed outside of Australasia and to short-sell equities (sell equities without owning them, on the expectation that prices will fall and could be purchased later for a lesser price). Benchmark: Official Cash Rate (OCR). Objective: The Fund aims to generate capital growth over the long term by actively investing in a concentrated portfolio of New Zealand and Australian equities and holding cash when appropriate investment opportunities cannot be identified. Minimum suggested investment timeframe: 5 years Distributions: 6 monthly at our discretion. Permitted investment mix: 0-100% New Zealand equities (Australasian equities) 0-100% Australian equities (Australasian equities) 0-100% cash or cash equivalent securities. Currency hedging: Permitted range 0-100%. DEVON AUSTRALIAN FUND Strategy: The Fund invests in a select portfolio of approximately companies which are primarily Australian listed companies. The Australian market offers exposure to a number of sectors that are not available in New Zealand. The Australian Fund is actively managed, which means the holdings and investment returns may differ considerably from its benchmark. While the Fund tends to be fully invested in equities, it may hold some cash or cash equivalent securities. Benchmark: The S&P/ASX200 (Accumulation) Index in NZD. Objective: The Fund aims to generate capital growth over the long term by actively managing your Australian equity investments. Minimum suggested investment timeframe: 5 years Distributions: 6 monthly at our discretion. Permitted investment mix: % Australian equities (Australasian equities) 0-20% cash or cash equivalent securities. Currency hedging: Permitted range 0-100%. Target investment mix 0-100% Australasian equities % cash or cash equivalent securities % Australasian equities. 0-20% Cash or cash equivalent securities. Risk category 4 This Fund has a medium to high level of volatility. 5 This Fund has a high level of volatility. 7

9 Continued... Summary of investment strategy and objectives DEVON DIVERSIFIED INCOME FUND Strategy: The Fund invests in a carefully selected portfolio of government and corporate bonds, cash, listed property, infrastructure and utility companies, high yielding equities, credit securities and other yielding financial assets. Devon utilises its expertise in Australasian equities either directly or through our managed investment scheme. We employ the specialist services of the JBWere Fixed Interest team to advise on fixed interest security selection and aid in portfolio construction. Devon has oversight and control over this investment process. Benchmark: OCR +1.5%. Objective: The Fund aims to give investors access to a diverse and carefully selected portfolio of high yielding investments and aims to outperform it s benchmark on a rolling 12 month basis. Minimum suggested investment timeframe: 1 year Distributions: Quarterly at our discretion. Permitted investment mix: 0-100% Fixed Interest securities 0-40% Listed equities 0-100% Cash or cash equivalent securities. 0-10% High Yield Credit. Currency hedging: Permitted range 0-100%. DEVON DIVIDEND YIELD FUND Strategy: The Fund invests in a select portfolio of approximately New Zealand and Australian listed equity securities chosen for their attractive dividend yields, with some growth prospects to maintain the dividend yield and capital value in real terms. The Dividend Yield Fund is actively managed, which means the holdings and investment returns may differ considerably from its benchmark. Benchmark: 50:50 composite of the S&P/NZX50 (Gross) Index and the S&P/ASX200 (Accumulation) Index fully hedged to NZD. Objective: The Fund invests in a well-researched portfolio of equities with the objective of generating an above market average dividend yield while providing some growth to maintain capital values in real terms. Minimum suggested investment timeframe: 5 years Distributions: Quarterly at our discretion. Permitted investment mix: 0-100% New Zealand equities (Australasian equities) 0-100% Australian equities (Australasian equities) 0-10% cash or cash equivalent securities. Currency hedging: Permitted range 0-100%. Target investment mix 0-100% New Zealand Fixed Interest. 0-40% Australasian equities % Cash or cash equivalent securities. 0-10% Other % Australasian equities. 0-10% Cash or cash equivalent securities. Risk category 3 This Fund has a low to medium level of volatility. 4 This Fund has a medium to high level of volatility. 8

10 Continued... Summary of investment strategy and objectives DEVON TRANS-TASMAN FUND Strategy: The Fund invests in a select portfolio of approximately well researched companies which are primarily New Zealand and Australian listed companies. The Trans-Tasman Fund is actively managed, which means the holdings and returns may differ considerably from its benchmark. While the Trans- Tasman Fund tends to be fully invested in equities, when there are few compelling investment opportunities the Fund may hold some cash or cash equivalent securities. Benchmark: 50:50 composite of the S&P/NZX50 (Gross) Index and the S&P/ASX200 (Accumulation) Index unhedged to NZD. Objective: This Fund aims to generate capital growth over the long term by actively managing your New Zealand and Australian equity investments. Minimum suggested investment timeframe: 5 years Distributions: 6 monthly at our discretion. Permitted investment mix: 0-100% New Zealand equities (Australasian equities) 0-100% Australian equities (Australasian equities) 0-50% cash or cash equivalent securities. Currency hedging: Permitted range 0-100%. GLOBAL THEMES FUND Strategy: The Fund will hold an investment portfolio of global financial assets and cash. These assets may include Exchange Traded Funds, listed equity securities, index funds, futures contracts, currency positions and derivative securities. The Global Themes Fund is actively managed, which means the holdings and investment returns may differ considerably from its benchmark. Benchmark: The ishares MSCI All Country World Index ETF 50% hedged to NZD. Objective: The investment objective is to outperform the benchmark after management fees on a rolling 3 year basis. Minimum suggested investment timeframe: 5 years Distributions: At the date of this PDS, we do not intend to pay distributions from the Fund. Permitted investment mix: % global financial assets 0-20% cash or cash equivalent securities. Currency hedging: Permitted range 0-100%. Target investment mix % Australasian equities. 0-50% Cash or cash equivalent securities % International equities. 0-20% Cash or cash equivalent securities. Risk category 5 This Fund has a high level of volatility. 5 This Fund has a high level of volatility. We can make changes to the SIPO of any Fund in accordance with the Trust Deed and the Financial Markets Conduct Act Before making changes to the SIPO, we will consider if the changes are in your best interests and consult with the Supervisor. We will give notice of changes to unit holders of the relevant Fund prior to effecting any material changes. The most current SIPO for the Funds can be found on the scheme register at Our use of the various market indices referred to in the above table is subject to certain terms, conditions and disclaimers as described in the offer register at in the document titled Other Material Information. This is located under the Documents tab on the managed fund offer register under Devon Investment Funds. Further information about the assets in the Funds can be found in the Fund Updates on our website 9

11 What are the risks of investing? Understanding the risk indicator Managed funds in New Zealand must have a standard risk indicator. The risk indicator is designed to help investors understand the uncertainties both for loss and growth that may affect their investment. You can compare Funds using the risk indicator. An example of our risk indicator is below. LOWER RISK potenially lower returns HIGHER RISK potenially higher returns The risk indicator for each of the Funds can be found on pages 2 to 3 of this PDS. The risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the Fund s assets goes up and down (volatility). A higher risk generally means higher potential returns over time, but more ups and downs along the way. To help you clarify your own attitude to risk, we suggest you seek financial advice or work out your risk profile at Please note that even the lowest category does not mean a risk-free investment, and there are other risks that are not captured by this rating. This risk indicator is not a guarantee of a Fund s future performance. The risk indicator is based on the returns data for the five years to 30 September 2018 where available. While risk indicators are usually relatively stable, they do shift from time to time. You can see the most recent risk indicator in the latest quarterly Fund Update for these Funds. A combination of actual Fund returns and market index returns, as outlined on page 3, has been used to determine the risk indicator for the Devon Diversified Income Fund and Global Themes Fund as these Funds have not been operational for the required 5 years. General investment risks Some of the things that may cause a Fund s value to move up and down, which affect the risk indicator, are: Market risk: Risk of losses based on the overall performance of financial markets. Security specific risk: Risks that are specific to a particular security. Currency & hedging risk: Risk of losses from fluctuating foreign exchange rates. Interest rate risk: Risk that a security s value will change due to a change in interest rates. Investment objective risk: Risk that the investment objectives of a Fund will not be met. Concentration risk: Risk arising from a Fund s assets being concentrated in a particular security, group of securities, geographical area, industry or other grouping. Operational risks: Risk of an error in procedures or systems which impacts the pricing of units in a Fund. If any of these risks occur, you may receive less on the sale of your units than you expect. No person guarantees or promises the repayment of, or returns on, your investment in the Funds. Other specific risks There may be other circumstances that can increase the risk to your returns that are not reflected in the risk indicator. We recommend you view our Other Material Information document which contains information about other risks not mentioned in this PDS. Our Other Material Information document can be found on the offer register at 10

12 What are the fees? You will be charged fees for investing in the Funds. Fees are deducted from your investment and will reduce your returns. The fees you pay will be charged in two ways: regular charges for example annual fund charges and performance fees. Small differences in these fees can have a big impact on your investment over the long term; and one-off fees for example abnormal legal or regulatory fees. Annual Fund Charges Fund Estimated Estimated Estimated Estimated Total Management fee Administration performance-based annual fund charges (ex GST) charges (ex GST) fees (ex GST) (ex GST) Devon Alpha Fund 1.00% 0.25% 0.51% 1.76% Devon Australian Fund 1.00% 0. 25% 0.42% 1.67% Devon Diversified Income Fund 0.65% 0.25% N/A 0.90% Devon Dividend Yield Fund 0.70% 0.30% 0.12% 1.12% Devon Trans-Tasman Fund 1.00% 0. 25% 0.49% 1.74% Global Themes Fund 0.90% 0.30% N/A 1.20% Devon does not charge a buy/sell spread or any entry/ exit fees. These charges are an estimate set out as a percentage of each Fund s Net Asset Value (NAV). Actual charges over the previous 12 months are available in the latest Fund Update. Management fees: We charge an annual management fee to each Fund as set out above plus GST. This fee covers the investment management of the Fund and is accrued for daily in each Fund s unit price. Administration charges: These charges cover the general administration of the Fund including the Supervisor, normal legal, custody, registry, fund accounting, unit pricing and audit fees and are accrued for daily in each Fund s unit price as set out above plus GST. Brokerage and other transaction costs are paid directly by the Funds. Under the terms of the Trust Deed, other costs and expenses, such as abnormal or one off costs, brokerage, transaction costs and all taxes may also be charged to the Fund. Performance-based fees: These are estimates calculated on the basis of combined Fund returns since inception and market performance from 30 June 1992 to 30 September 2018 (26.25 years) as described in more detail on the offer register at govt.nz/disclose. We have not made any estimate for outperformance of the market by the Funds. Given this, and the use of long term averages, it is to be expected that actual performance fees may be more (or less) than shown in the table in any given year. Please see the details of how the performance fees are calculated below. Actual performance-based fees for the most recent scheme year will be available in the latest quarterly Fund Update. If Devon invests in other Funds, those Funds may also charge fees. At the date of this PDS, the Devon Diversified Income Fund invests into the Devon Dividend Yield Fund and all fees from this investment are fully refunded. Performance-based fees Some of our Funds have performance-based fees if they earn above the Fund s hurdle rate of return, subject to a high water mark, as detailed below. The use of a high water mark ensures that you do not pay for the same performance twice. The term high water mark means the highest value that a Fund has achieved on previous performance fee calculation dates. Performance-based fees are only payable if a Fund s performance exceeds the high water mark. A high water mark ensures that if a manager loses money over a period, they must achieve investment returns above the high water mark before receiving a performance-based fee. The high water mark can be reset every three years at our discretion in conjunction with the Supervisor. 11

13 Devon Alpha Fund Devon Australian Fund Hurdle rate of return 12%p.a. Amount of fee The first 1% of gross return above the hurdle rate of return up to 13% per annum, then 15% of the gross return thereafter. Hurdle rate of return Amount of fee 10%p.a. 10% of the net return of the Fund (reflected in the unit price) over the hurdle rate of return for the relevant period. Maximum limit No Maximum limit No High water mark Yes High water mark Yes Frequency of payment and calculation Calculated and accrued, if applicable, in the daily unit price and paid annually, on 31 March each year. Frequency of payment and calculation Calculated and accrued, if applicable, in the daily unit price and paid monthly based on the rolling annual returns. Devon Trans-Tasman Fund Devon Dividend Yield Fund Hurdle rate of return Amount of fee Maximum limit High water mark Frequency of payment and calculation 9.85%p.a. 10% of the net return of the Fund (reflected in the unit price) over the hurdle rate of return for the relevant period. No Yes Calculated and accrued, if applicable, in the daily unit price and paid monthly based on the rolling annual returns. The Diversified Income Fund and Global Themes Fund do not charge a performance fee. Hurdle rate of return Amount of fee Maximum limit High water mark Frequency of payment and calculation 50:50 composite of the S&P/ NZX50 (Gross) Index and the S&P/ASX200 (Accumulation) Index fully hedged. 10% of the net return of the Fund (reflected in the unit price) over the Fund s hurdle rate of return for the relevant period. No Yes Calculated and accrued, if applicable, in the daily unit price and paid monthly based on the rolling annual returns. Various individual action fees As at the date of this PDS we do not charge any buy/ sell spread, contribution, establishment, entry/exit, switching, termination or withdrawal fees for any of the Funds offered within this PDS. Example of how fees apply to an investor Mel invests $10,000 in the Devon Trans-Tasman Fund. She is not charged an establishment fee or contribution fee. This brings the starting value of her investment to $10,000. She is charged an annual management fee and other expenses, which work out to about $125 (1.25% of $10,000) over the year. These fees might be more or less if her account balance has increased or decreased over the year. Mel may also be charged a performance-based fee if her Fund earned more than its hurdle rate subject to a high water mark. See the latest Fund Update for an example of the actual returns and fees investors were charged over the past year. This example applies only to the Devon Trans-Tasman Fund. If you are considering investing in other Funds within the Scheme, this example may not be representative of the actual fees you may be charged. The fees can be changed The existing fees may be changed or new fees imposed in accordance with the Trust Deed and applicable law upon giving you 90 days written notice. We must publish a quarterly Fund Update for each Fund showing the fees actually charged during the most recent year. Fund Updates, including past fund updates, are available at Estimated total fees for the first year Fund charges: $125 12

14 What taxes will you pay? Each Fund is a portfolio investment entity (PIE). The amount of tax you pay is based on your Prescribed Investor Rate (PIR). To determine your PIR, go to or calculate using the table below. At the date of this PDS, if you are a natural person investor and a New Zealand tax resident, you will have a PIR of 10.5%, 17.5% or 28%. To qualify for a 10.5% or 17.5% PIR, you must supply a valid IRD number and meet the following criteria in relation to either of the previous two tax years*: If your taxable income is And your taxable income plus PIE income is Then your PIR rate is $0 - $14,000 $0 - $48, % $0 - $14,000 $48,001 - $70, % $14,001 - $48,000 $0 - $70, % * Tax years generally commence on 1 April in any year and end on 31 March in the following year. If you are a natural person investor and do not qualify for the above 10.5% or 17.5% PIR, you will have a PIR of 28%. The PIR of a company, a unit trust and charity investors will be 0% unless the investor does not provide a valid IRD number or notify us of it s PIR, in which case a PIR of 28% will apply. If you are joint investors, you will be taxed at the highest of the joint PIRs. If you are a New Zealand non-resident, you will have a PIR of 28%. You will not be able to elect for a lower PIR to be applied. If you are a non-resident investor you are advised to seek your own professional tax advice. If you are unsure of your PIR, we recommend you seek professional advice or contact the Inland Revenue Department. It is your responsibility to tell us your PIR when you invest or if your PIR changes. If you do not tell us, a default rate may be applied. If the advised PIR is lower than the correct PIR, you will need to complete a personal tax return and pay any tax shortfall, interest and penalties. If the default rate, or the advised PIR, is higher than the correct PIR, you will not get a refund of any overpaid tax. 13

15 Who is involved? About Devon Devon is an investment management business that specialises in building investment portfolios for our clients. Further information on Devon can be found in How does this investment work? on page 5. We are the Manager of the Funds and can be contacted at: Devon Funds Management Limited Level 10, 2 Commerce Street Auckland 1010 PO Box Auckland City 1143 Telephone: (free call) or enquiries@devonfunds.co.nz Information about key personnel for the Funds can be found on our website Who else is involved? Role Name Description Supervisor Custodian Administration Manager The New Zealand Guardian Trust Company Limited BNP Paribas Fund Services Australasia Pty Limited MMC Limited Supervisor of the Devon Investment Funds under the Financial Markets Conduct Act 2013, responsible for supervising us as Manager of the Funds. Appointed by the Supervisor to hold the assets of the Funds on behalf of investors. Appointed by us to provide various administration functions in respect of the Funds, including registry, unit pricing and fund accounting. Adviser JBWere (NZ) Pty Limited Appointed by us to provide investment advice for the Global Themes Fund and the Diversified Income Fund. How to complain. Any complaints about the Funds can be made to us at the address above. You can also send your complaints to the Supervisor at: The New Zealand Guardian Trust Company Limited Level 14, 191 Queen Street, Auckland 1010 PO Box 274, Shortland Street, Auckland 1140 Telephone: Devon is a member of Insurance and Financial Services Ombudsman Scheme which is an independent dispute resolution scheme approved by Ministry of Commerce and Consumer Affairs. If you have made a complaint to us and it has not been resolved within 40 days, or if you are dissatisfied with the proposed resolution, you can refer it to: Insurance and Financial Services Ombudsman Scheme Level 8, Shamrock House Molesworth Street Wellington (Call free) (Wellington) Insurance and Financial Services Ombudsman Scheme will not charge a fee to any complainant to investigate or resolve a complaint. Further information about referring a complaint to Insurance and Financial Services Ombudsman Scheme can be found at 14

16 Where you can find more information. Further information relating to the Devon Investment Funds (for example, financial statements) is available on the offer register and the scheme register at A copy of the information on the offer register and the scheme register is available on request to the Registrar. A copy of that information can also be obtained by contacting us at: Devon Funds Management Limited Level 10, 2 Commerce Street Auckland 1010 PO Box Auckland City 1143 Telephone: (free call) or enquiries@devonfunds.co.nz We are required to publish quarterly Fund Updates for each Fund. The Fund Updates show the returns, and the total fees actually charged to investors, during the previous year. The latest Fund Updates are available at We will also give you copies of those documents free of charge on request to any of our contact details set out above. You will also be sent an annual tax statement which will include the amount of PIE income allocated to you and the amount of tax paid at your chosen PIR. You will also be asked to confirm your IRD number and PIR. How to apply. If you are making an investment directly with Devon then you can either apply directly on our website at or complete the application form at the back of this PDS. 15

17 Glossary. BENCHMARK CORPORATE BOND DIVIDEND YIELD EQUITIES FIXED INTEREST GOVERNMENT BOND HEDGING SECURITIES YIELD the standard against which the performance of a Fund is compared. a debt security issued by a company or other entity. how much a company pays out in dividends each year relative to its share price. a share representing an ownership interest in an entity (generally companies). debt security, such as a bond, that is issued by an entity and makes interest securities payments. A fixed interest security pays a specified rate of interest that does not generally change over the life of the instrument. The face value is scheduled to be returned at the end payment date. a debt security issued by a national government. investment structure to reduce the volatility of price movements in an asset. any financial asset. the income return on an investment i.e. the interest or dividends received. Yield is usually expressed as a percentage of the value of the investment. 16

18 How to complete the Application Form. If you need help with understanding the application process or the documents you need to provide, please contact us on (free call) or or by at Investment instructions The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) came fully into force on 30 June The following application forms and requests for documentation comply with the new requirements, however in certain circumstances we may need to collect extra information from you and anyone who is acting on your behalf for the purposes of the AML/CFT Act. The Parliament of New Zealand enacted the AML/CFT Act 2009 for the purposes: a) to detect and deter money laundering and the financing of terrorism; and b) to maintain and enhance New Zealand s international reputation; and c) To contribute to public confidence in the financial system. The AML/CFT Act applies to banks and most financial institutions, and it is essential that we comply. Sometimes this may mean that we won t be able to complete your investment instructions or meet your needs until all of the necessary information is obtained. We are committed to protecting the privacy of your information and we will continue to ensure all identity and other personal information you provide will be used and managed in accordance with the Privacy Act If you have any questions or concerns in respect of the new requirements under the AML/CFT Act please feel free to contact us. Lump Sum If you are an existing client, please supply your account name and Unit Holder number as a reference when crediting funds. To invest, complete, sign and return the application form attached to this Product Disclosure Statement. You can pay by: Personal Cheque made out to The New Zealand Guardian Trust Company Limited O/A Devon Funds Management Limited and crossed Not Transferable. If it is not a personal cheque from a NZ registered bank we may have additional identification requirements. Direct credit (from a New Zealand registered bank only) to the following account: in the name of The New Zealand Guardian Trust Company Limited O/A Devon Funds Management Limited. We will not be held liable for insufficiently referenced payments. Cash will not be accepted. Regular Contributions Please complete the application form and direct debit form. The initial contribution should be entered as the Lump Sum, with subsequent contributions entered as regular contributions. The NZ$10,000 minimum applies for the initial contribution and NZ$100 minimum per quarter for subsequent regular payments. We retain the right to alter these minimums at anytime. Please post your completed application form and your cheque (if paying by cheque) to: Devon Funds Management Limited c/o MMC Fund Administration P O Box Auckland City 1143 Identification We are required to verify your identity and your address by law. If you are over 18 years, we will need certified photocopies of acceptable forms of identification to verify your identity which will include: Current New Zealand passport; OR Current international passport; OR New Zealand firearms licence; OR New Zealand driver s licence or international driver s permit PLUS one of the following: New Zealand birth certificate; OR Overseas birth certificate; OR New Zealand certificate of citizenship; OR Certificate of citizenship issued by a foreign Government; OR Current credit card, debit card, or eftpos card signed by you and issued by a registered New Zealand bank and a bank statement issued by a registered New Zealand bank dated within the previous 12 months (New Zealand driver s licence only). 17

19 Investor Complete Individual Form 1 Trusts Form 1 and Form 2 Companies, Sole Traders, Partnerships, Limited Partnerships and Co-Operatives Form 1 and Form 3 Address verification To verify your address, certified photocopies of acceptable documents which set out your name and current address and are dated within the previous six months include: Power or home phone bill; OR Rates bill; OR Bank account statements; OR IRD statements; OR Car registration documents. Identification of a minor If you are under 18 years of age, we will require identity verification for both you and your parent(s)/guardian(s). If you are aged 15 or under, both parents/all legal guardians will be required to sign the Application Form on your behalf and provide proof of their identity. You will also be required to provide proof of your identity. This means you will need to provide a certified photocopy of documents that contain the following information: Your identity and address. This document must set out the minor s name and current address and be dated within the previous six months (for example a bank statement); AND Both of your parents/all of your guardians identity and address. These documents must set out your parents/guardians names and current address(es) and be dated within the previous six months and could include: Bank statement; OR Power or home phone bill; OR Rates bill; OR IRD statement; OR Car registration documents. PLUS proof of guardianship which can include: Your birth certificate; OR Guardianship order; OR Deceased parents death certificate and a will appointing these people as your guardian; OR If all of the above is not possible, a statutory declaration confirming that these people are your guardians. If you are aged 16 or 17 years, your will be required to sign the Application Form and provide proof of your identity and address. One parent/guardian will also be required to sign the Application Form and provide proof of identity and address. If you are aged 16 or 17 years and you are married, in a de facto relationship or a civil union, then you will be required to sign the Application Form. We do not need your parent/guardian to provide identification or to sign the Application Form, but we will need you to provide a copy of your marriage or civil union licence (or proof of the de facto relationship). Certification of documents We will accept photocopied documents certified by someone who is over 16 years of ages and is one of the following: Commonwealth representative (as defined in the Oaths and Declarations Act 1957); OR An employee of the Police who holds the office of constable (as defined in section 4 of the Policing Act 2008); OR Justice of the peace; OR Registered medical doctor; OR Kaumātua; OR Registered teacher; OR Minister of religion; OR Lawyer (as defined in the Lawyers and Conveyancers Act 2006); OR Notary public; OR New Zealand Honorary consul; OR Member of Parliament; OR Chartered accountant (within the meaning of section 19 of the New Zealand Institute of Chartered Accountants Act 1996). The person certifying your document must not be: related to you; for example, your parent, child, brother, sister, aunt, uncle or cousin; OR your spouse or partner; OR a person who lives at the same address as you. If sufficient identification and address verification is not provided your application will be rejected and your payment returned. Payments returned to investors will not be eligible to accrue any interest. Distribution instructions Please mark the distribution method. If no choice is made, distributions will be automatically re-invested. Your bank account and branch number may be found on your bank statement. 18

20 Application Form checklist. Have you: Completed all of your contact details. Provided your nominated bank account details. Signed and dated the signature declaration section. If paying by personal cheque, included your cheque crossed Not Transferable made payable to: The New Zealand Guardian Trust Company Limited O/A Devon Funds Management. If paying by direct credit, please send funds electronically to: The New Zealand Guardian Trust Company Limited O/A Devon Funds Management account number Completed your Prescribed Investor Rate. Provided your proof of identification together with other documentation as outlined below. Documentation checklist Please use this checklist to ensure you provide the correct documentation with your application form. Refer to How to complete the application form on page 17 for acceptable forms of identification. Individual or Joint Account Original or original certified bank encoded deposit slip, bank statement or confirmation from your bank verifying the account name and number. Certified forms of identification and address verification for each applicant. Original certified Power of Attorney and Certificate of Non-revocation (applicable if your Authorised Representative has been granted authority by virtue of a Power of Attorney). Copy of resident withholding tax exemption certificate (if applicable). Completed Form 1. Company Account Original or original certified bank encoded deposit slip, bank statement or confirmation from your bank verifying the account name and number. Certified forms of identification and address verification for each Company Director/Authorised Representative. Copy of authority to act. Copy of the Certificate of Incorporation. Copy of resident withholding tax exemption certificate (if applicable). Completed Form 1 and Form 3. Partnership Account Original or original certified bank encoded deposit slip, bank statement or confirmation from your bank verifying the account name and number. Certified forms of identification and address verification for Partner. Original certified copy of Partnership Deed. Copy of resident withholding tax exemption certificate (if applicable). Completed Form 1 and Form 3. Trust Account Original or original certified bank encoded deposit slip, bank statement or confirmation from your bank verifying the account name and number. Certified forms of identification and address verification for each Trustee. Copy of resident withholding tax exemption certificate (if applicable). Certified copy of Trust Deed and all amendments. Completed Form 1 and Form 2. Estate Account Original or original certified bank encoded deposit slip, bank statement or confirmation from your bank verifying the account name and number. Certified forms of identification and address verification for each executor. Original certified copy of Probate. Copy of resident withholding tax exemption certificate (if applicable). Completed Form 1. 19

21 Affix cheque here 12 November 2018 Devon Investment Funds Application All Applicants Form 1 (FORM 1: PAGE 1 OF 4) Need assistance? Free call This is an application to invest in: Single lump sum investment (please tick appropriate boxes) (minimum $2,000) Regular investment amount Regular investment Start date Devon Alpha Fund $ $ 20 MM YYYY Devon Australian Fund $ $ 20 MM YYYY Devon Diversified Income Fund $ $ 20 MM YYYY Devon Dividend Yield Fund $ $ 20 MM YYYY Devon Trans-Tasman Fund $ $ 20 MM YYYY Global Themes Fund $ $ 20 MM YYYY Existing Devon Customer No Yes provide your investor number) 1. Investor details COMPANY NAME complete Form 3) list names of Directors in Form 3) PIR Rate (tick one) 0% 10.5% 17.5% 28% Company IRD number TRUST NAME complete Form 2) list names of Trustees in Form 2) PIR Rate (tick one) 0% 10.5% 17.5% 28% Trust IRD number Does the entity have any controlling persons? No Yes (If yes, details of the controlling person must be provided in Form 2 and/or 3) Companies, Sole Traders, Partnerships, Limited Partnerships, Co-Operatives and Trusts please go to Form 1 section 2. INDIVIDUAL 1 Title First names Residential Address Surname Please include any aliases / maiden names Date of birth Occupation Place of Birth: Country of Residence PIR Rate tick one) 10.5% 17.5% 28% Work phone ( ) Mobile phone Are you a US Citizen If yes, please provide your IRD number No Yes or Tax Resident? Social Security Number (SSN): Evidence of identity refer to page 17 and address provided for our requirements) Please list all countries where you are a tax resident. For each country, except New Zealand, you will need to provide a Tax ID Number (TIN) or equivalent in the table below. If a TIN is not available for that country, use the appropriate reason A, B or C. Reason A: The country where I am a tax resident does not issue a TIN to its residents. Reason B: I have not been issued a TIN by my country of tax residence (please include an explanation as to why a TIN was not issued to you in the table below). Reason C: The domestic law of the country where I am a tax resident does not require the collection of a TIN. 20